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CVS: The Web Strategy

CVS: The Web Strategy. Erin Horvath and Lauren Possiel. Vision Statement. “We will be the easiest pharmacy retailer for customers to use.” . Mission Statement. “We help people live longer, healthier, happier lives.” . 2. Background. Founded: 1963

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CVS: The Web Strategy

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  1. CVS: The Web Strategy Erin Horvath and Lauren Possiel

  2. Vision Statement “We will be the easiest pharmacy retailer for customers to use.” Mission Statement “We help people live longer, healthier, happier lives.” 2

  3. Background • Founded: 1963 • 4,100 stores in 1998 with sales over $15B • Brick and Mortar competitors • Walgreens, Rite-Aid, Eckerd • Click and Mortar competitors • Planet Rx, Drugstore.com • Growth by acquisition • 58% of revenue came from prescriptions • Revenue was being threatened by click and mortar pharmacies as well as PBMs 3

  4. Problem Statement Was it more advantageous, and potentially more profitable, for CVS to leverage their existing distribution network for the filling of on-line prescription orders or would a partnership with Merck-Medco prove to be more lucrative in the long term? 4

  5. SWOT Analysis 5

  6. E-Commerce Analysis • 56% of prescriptions filled in the U.S. were filled for people at least 45 years old • The site neglected 30% of revenue potential from traditional chain drug stores • CVS.com offered discounts of up to 44% on everyday items such as Q-tips • 2-3 day delay for authorization 6

  7. Strategic Recommendation Acquire Express Scripts, including Advance Paradigm and not move forward with a partnership with Merck-Medco • Express Scripts covered 74 million lives between two companies – Advance Paradigm and Express Scripts • CVS covered 6 million lives through PharmaCare • Together CVS and Express Scripts could surpass Merck-Medco and PCS by covering 80 million total lives • Avoid an ongoing strained relationship with Merck-Medco 7

  8. Investment Recommendation BUY 1998 1999 2000 8

  9. Thank you for your time Questions? 9

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